CPS pension holiday bill fails

SPRINGFIELD --- A plan to allow Mayor Rahm Emanuel to skip a large chunk of Chicago Public Schools pension payments for two years failed today after Gov. Pat Quinn vowed to veto it unless lawmakers also approve comprehensive government worker pension.

The proposal cleared a House committee, but failed in the House with only 39 votes.

Because the legislature in 2010 allowed CPS to temporarily pay less than its required pension payments, the district this year is paying $196 million into its teacher pension funds — far less than what it actually owed.

But that so-called holiday is about to expire and next year payments were expected to soar to more than $612 million. The Emanuel administration has said that ballooning pension obligation was a major factor in a $1 billion CPS budget deficit for next year.

Under a proposed two-year extension of the pension holiday that surfaced today. CPS would once again not have to pay the full amount. Instead it would pay $350 million next year and $500 million the year after — still less than what would be required to fully meet the pension obligations.

Sponsoring Rep. Elaine Nekritz called the city's financial troubles untenable. She said city was only legally allowed to raise about to raise $84 million through property taxes. The new teacher contract alone will cost $93 million.

"This is a difficult and unfortunate action," said Nekritz, a Northbrook Democrat who is House Speaker Michael Madigan's point person on pensions.

She said it is a choice between "bad" and "worse" and bad is the best available.

Quinn, however, issued a statement as the House panel was getting ready to debate the bill.

“I will not sign any extension of a pension holiday for Chicago Public Schools unless the General Assembly sends comprehensive public pension reform to my desk," Quinn said in a statement issued this afternoon.

Emanuel spokeswoman Sarah Hamilton issued a statement after the bill failed in the House.

"It's unfortunate that the 400,000-plus students of Chicago will not receive relief from the looming pension cliff. In the absence of meaningful reform, both CPS and CTU found agreement on a pension ramp that would provide room for more negotiations and at the same time prevent deep cuts in the classroom,” Hamilton said. “The pension crisis is now here, we will continue to push for a comprehensive pension reform package that will allow CPS to avoid a devastating increase in class size."

Although the mayor is fond of saying the city’s financial problems cannot be kicked down the road, the administration supports the effort to scale back a financial hit that it says would have forced the layoff of teachers, swelling of class sizes, or both.

“Chicago Public School students and their class sizes should not be used as a pawns in securing state pension reform,” said Sarah Hamilton, a spokeswoman for the mayor. “Pension reform should be done on its own merits, without threatening to use our kids and their class size as bargaining chips.”

Emanuel has pushed for pension reform at the city level, but an absent an agreement at the state level, Chicago issues are likely to go unaddressed.

“Since he first ran for office, Mayor Emanuel has been one of the most vocal and consistent advocates for pension reform in Illinois,” Hamilton said. “In the absence of reform, the mayor supports this legislation which nearly doubles CPS pension contribution, but helps avoid horrible increases in class size.”

Rep. David McSweeney, a suburban Republican, apologized to Chicago teachers for the "very disappointing" action, saying it reflects the same style of solution that got Illinois' state pension systems "in trouble."

"Now we're going to get the city in trouble," McSweeney said. "We're going to kick the can down the road."

The House pension panel voted 6-4 to send the legislation to the full House.

Rep. Darlene Senger, R-Naperville, called it "extremely frustrating" and noted Emanuel had come seeking broad-based pension relief last year with no results in the General Assembly, a situation that reflects the state's own stalemate on seeking a pension overhaul.

Quinn's comments came as Moody's, a ratings service, issued a warning that the state's already worst-in-the-nation credit rating could fall further if Illinois does not move on pension reform.

Lawmakers have been unable to agree on a pension reform bill for the state's public employee pension systems. The House and Senate have passed dueling versions, with the Senate voting down the House's version last night as tensions escalated between Speaker Michael Madigan and Senate President John Cullerton.